Second Circuit denies Kalshi’s injunction requests against New York and Connecticut

The U.S. Court of Appeals for the Second Circuit on Tuesday, 3 November denied Kalshi Markets Inc.’s requests for injunctions against New York and Connecticut authorities, and likewise denied a similar request from Coinbase in Connecticut. A three-judge panel held that the companies failed to show that an order halting regulators’ actions while appeals proceed was warranted.

What the Second Circuit decided

The decision combined three distinct proceedings: Kalshi’s litigation with the [New York State Gaming Commission (NYSGC)](/regulation); Kalshi’s dispute with the Connecticut Department of Consumer Protection (DCP); and Coinbase’s appeal against Connecticut Attorney General William Tong and other state officials. In its order the court wrote:

"Upon due consideration, it is hereby ordered that the motions are denied because appellants have failed to make the required showing that an injunction pending appeal is warranted," the opinion states.

The order did not include detailed legal reasoning explaining the denial.

How the cases reached the Second Circuit

Kalshi’s appeals reached the Second Circuit after federal courts in each state previously refused injunctive relief. In July, U.S. District Judge Analisa Torres denied Kalshi’s request in New York, finding the state’s gaming laws are not preempted by the Commodity Exchange Act (CEA). In August, U.S. District Judge Vernon Oliver denied the petition in Connecticut and concluded that contracts on sporting events do not meet the CEA definition of a "swap."

Kalshi appealed both rulings and the Second Circuit consolidated those appeals with Coinbase’s, which offers sports contracts via Kalshi’s platform. After the federal rulings, the states filed state-law suits seeking to remove those contracts from the market.

State lawsuits and claimed damages

In New York, Governor Kathy Hochul and Attorney General Letitia James sued Kalshi on 31 July, seeking approximately $36bn in financial penalties including disgorgement, restitution to customers and fines tied to profits generated by the products in the state. Four weeks later Connecticut Attorney General William Tong, Governor Ned Lamont and the Connecticut Department of Consumer Protection filed their own state complaint against the company.

Kalshi sought to move both suits into federal court, but each state filed a motion in September to remand its case back to state court. The Second Circuit’s order came the same day Hochul, James, Tong and Lamont were reelected in the midterm elections.

Other federal circuit rulings in 2026

The Second Circuit denial adds to a string of appellate rulings favoring states this year. The Ninth Circuit rejected Kalshi’s appeal involving Nevada in late August in a unanimous 3-0 decision. In September the Ninth Circuit ruled for two California tribes that contracts sold by Kalshi violate the Indian Gaming Regulatory Act (IGRA). The Sixth Circuit issued a unanimous 3-0 ruling in September allowing Ohio and Tennessee to pursue enforcement actions against Kalshi; following that ruling, Ohio extended its enforcement to other prediction-market operators, including Coinbase. The Ninth Circuit also denied a petition for rehearing en banc against Nevada.

The only major circuit ruling this year favorable to prediction markets was the Third Circuit’s 2-1 decision for Kalshi against New Jersey in April. That decision underpins the petition New Jersey took to the U.S. Supreme Court. The Supreme Court granted Kalshi a second extension to file its response to New Jersey’s petition, setting the new deadline for 7 December.

Procedural status and next steps

With the Second Circuit denial, New York and Connecticut prosecutors are free to press their state suits and any pending enforcement against Kalshi’s sporting-event contracts. Kalshi is preparing its response to the Supreme Court petition in the New Jersey case, due 7 December.